The 14 Best Startup Cities in America

No disrespect to San Francisco or Brooklyn, but we wanted to identify the next wave of cities building an ecosystem to turn innovators into entrepreneurs.

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1. St. Louis, Missouri

Interstate 44 cuts through downtown St. Louis, four lanes of asphalt, the city center on one side, the Mississippi River on the other. On a sweltering weekend last July, construction crews shut down the highway where it dips 20 feet below ground level. A massive crane wheeled onto the roadbed. One by one, the crane swung 40 huge girders into place, 100-foot-long steel ribs spanning the highway like fingers reaching out from downtown to the water below. The girders form the foundation of what will be part of a resplendent park.

Cities do this—correct their mistakes. Boston (I-90) and Cincinnati (I-71) and Hartford, Connecticut (I-91), and now Seattle (the Alaskan Way Viaduct) have all decided in recent years that a traffic-choked interstate slicing like a wound between the city center and the waterfront is not such a good idea after all. They are patching over roadways with parks and plazas that breathe the life of the river or harbor back into a city center. And the effort in St. Louis, which they call CityArchRiver 2015 and which will ultimately cost $380 million, comes at an opportune time for the city.

St. Louis is a place where people come to make things—always has been. It was founded by enterprising fur traders and thrived on the wealth of railroad barons and beer moguls. Then manufacturing seized up, the recession hit, and Anheuser-freaking-Busch, a symbol of American economic might, sold out to the Belgian company InBev.

Dark times. Nobody moving in. Few people making anything.

But now this park—this bridge over the highway—is a symbol. A sign that construction of all kinds of things has returned, or is returning, or might return. An inspiration.

On a revitalized corner of Washington Avenue, lined with new trees and granite curbs, a shared work space and startup hub called T-Rex has almost finished renovating a landmark 1898 building. The city and its chamber of commerce are behind T-Rex, which now offers 80,000 square feet of office space for fledgling companies. Sample tenant: Betaversity, the brainchild of Washington University biology student Blake Marggraff, 22, and two of his associates. The company's main product is the BetaBox Mobile Prototyping Lab, a work space with 3D printers, laser cutters, CNC routers, and more—all cleverly wedged into a shipping container. "Our company has been around for about 11 months and served 22 clients, which is pretty crazy," says Marggraff. "We've been renting out BetaBoxes up and down the East Coast."

Before moving into T-Rex, Betaversity received $50,000 from Arch Grants. Founded in 2011, the nonprofit has awarded $3.1 million to 55 startups, according to executive director Ginger Imster. Arch Grants is one of 15 entities—including Washington University, St. Louis University, and the University of Missouri–St. Louis—that support local entrepreneurship.

It's not unusual today for a city to have a robust support system for startups. But the network in St. Louis came together like lightning. When Anheuser-Busch was sold in 2008, St. Louis's unemployment rate was about 6 percent and rising sharply. (It peaked 15 months later at 10 percent.) That's when a consortium of business leaders, the state economic development agency, the St. Louis chamber of commerce, and the universities devised a plan to create jobs by creating startups. From 2011 to 2013 the ecosystem supporting entrepreneurs more than doubled in size with the launch of eight makerspaces (shops with tools like 3D printers and laser cutters), accelerators (early-stage investors and mentors), and coworking spaces (a shared office for startups, with low rent).

"It's not the biggest scene," Marggraff says. "It is, however, extremely exciting, because it's one of the fastest accelerating. We want to create a maker system that would attract anyone."

The maker system, as Marggraff calls it, is just one thing that makes St. Louis attractive. The city is a patchwork of parks, funky old neighborhoods, and grand stone homes, but now a current of commerce races beneath it. The new business corridor starts at the riverfront and reaches 8 miles west. In two years, when the Gateway Arch park renovation is finished, entrepreneurship, which gave St. Louis its start, will have long since jump-started its rebirth.

Image Credit: Dhanraj Emanuel

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2. Asheville, North Carolina

Mike Rangel, a pioneer of the craft-brewing industry in Asheville, North Carolina, says it's a BYOJ city, as in "bring your own job." People may move here for college or because it's naturally beautiful and reasonably inexpensive. But they stay for the chance to make a living exactly how they want to. The Blue Ridge Parkway dips into a valley and cuts through town as it peels toward the Great Smoky Mountains National Park. As you make your way past the art galleries and restaurants downtown, catching whiffs of pine (and weed), you may wish you could move here, which is what so many entrepreneurs have already done.

Asheville is awash in startup breweries—Wicked Weed (see?), Green Man, and about 20 more. Many are supplied by Riverbend Malt House, which grows and processes local grain. Launched in 2011, it recently secured expansion funding through the Accelerating Appalachia incubator, which backs sustainable agricultural and food startups.

Venture Asheville, a public–private partnership, is the primary business accelerator in town. It's the headquarters of the Asheville Angels, a network of seasoned executives looking to back startups, and the Venture Asheville Mentors, which pairs established entrepreneurs with new ones. Asheville's status as a sweet college town and haven for neo-hippies isn't fading; it's just changing to reflect the influx of people who see no harm in making a little money.

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3. Oakland, California

Ten years ago Walter Craven relocated his furniture design and fabrication business, Blank + Cables, from San Francisco to Oakland, which, he says, welcomes "dirty welders and sparks and noise." In fact, flying sparks and noise have signaled productivity in Oakland ever since the city's blue-collar workforce built Navy ships there during World War II.

In the early 2000s, before the maker movement had a name, industrial artisans in Oakland opened two high-tech DIY shops, Nimby and the Crucible, hangar-size work spaces with machinery for creating just about anything. By 2013 the maker community was spawning startups and emerging as an economic force, prompting the launch of Oakland Makers, a manufacturing-industry advocacy group.

Oakland perfectly suits Alec Rivers of Taktia, a startup developing a handheld CNC router. After earning his doctorate from MIT in 2013, Rivers set up Taktia's West Coast operation in BlueSprout, a business incubator in a renovated old brick building with massive windows. Rivers says lower costs drew him to Oakland, where industrial space and apartments rent for 57 percent and 59 percent less, respectively, than they do in San Francisco.

If San Francisco is the nation's tech hub, then Oakland is its makerspace. "We exemplify community compassion: bring everybody along, bring the village along," says Margot Prado, the city's senior economic development specialist. "That's what the maker sensibility is."

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4. Portland, Maine

Three square blocks. That's roughly the size of the epicenter of the industrial boom in Portland right now. You'll find them in East Bayside, your classic old-tool-and-dye-factories-turned-coffee-roasters-and-breweries-plus-a-Whole-Foods neighborhood. Bomb Diggity Bakery, Rising Tide Brewing Company, Urban Farm Fermentory—businesses like these are redefining this historic port-based trade hub as startup central.

In 2011 the city's government and business leaders created a growth plan based on the "creative economy." One result: Last June Portland hosted the first Maine Startup & Create Week, with 100-plus speakers and a series of pitch and networking sessions. Meanwhile, the Center for Entrepreneurship at the University of Southern Maine awards $25,000 annually to the winner of its small-business-plan competition. The new Casco Bay Technology Hub this year will begin offering early-stage investment in digital startups. Makers and artists can design and prototype their wares at the Open Bench Project, a makerspace with wood and metal shops, and a 3D design and printing studio. And there is beer. Rising Tide launched in 2010 with one employee and now has 11. Indeed, the 13 craft breweries in Portland are important: They create jobs, draw tourists, and give the workers something to drink at night.

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5. Baltimore, Maryland

The graffiti on the white cargo van parked in front of Baltimore's Woodberry Kitchen looks like a kid drew it with a blue Sharpie. It shows a cartoonish steak knife with a dot for an eye, a comma for a smile, and a dialog bubble that says, "Cut out the pesticides!"

In 2007 when Spike Gjerde opened Woodberry in a repurposed 19th-century millhouse, he bought his goods from a handful of purveyors at local farmers markets, and had 17 people on the restaurant's payroll. Today he has four restaurants, 270 full-time employees, and more than 225 suppliers, all of them local producers. (The van with the graffiti is from pesticide-free Cottingham Farm in nearby Easton, Maryland.)

"The term farm-to-table didn't exist when we started out," Gjerde says. "But we had a story we wanted to tell, which is about how to be part of a local food system."

Gjerde's insistence on locally sourcing everything he serves has had a ripple effect, generating jobs not only for Baltimore-area farmers but also for fishermen in the Chesapeake Bay, local beekeepers and syrupmakers (honey and maple syrup are two of his primary sweeteners, Maryland not being a sugarcane state), and producers of organic meats and cheeses.

"Local cheese here used to be a joke," he says. "But we supported the cheesemakers as they strove to get better."

Baltimore's startup scene predates Woodberry Kitchen but has grown dramatically in recent years. Under Armour launched here in 1998 with a handful of employees—it now has more than 1,300. In 1999, Emerging Technology Centers opened in the historic Canton neighborhood in the 19th-century brick buildings formerly occupied by a can manufacturer. In 15 years the business incubator and accelerator has aided more than 350 companies that have attracted $1.6 billion in investments. In the past two years seven more accelerators have opened in Baltimore.

One thing that helps all startups in Baltimore—a low cost of doing business, including reasonable rents—also helped Gjerde. But something harder to quantify gave Gjerde a specific advantage. "Baltimore has always been a little behind-trend," he says. "That gave us the opportunity to nurture the local-food-system idea and grow it. People gave us time to get it right."

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6. Holyoke, Massachusetts

By Alex Morse, Mayor

I was born and raised in Holyoke, and I moved back here right after I got my degree in urban studies. At college I learned about the life cycle of cities, how they can run into bad times but also come back and be successful again. I wanted that for Holyoke, so I ran for mayor and won in 2011, when I was 22. In the three years since, my administration has worked with partners in the community and the region to make Holyoke a center of innovation.

One advantage we have is cheap energy. On the city's eastern border the Connecticut River drops 57 feet as it presses south. When the city was founded, in 1850, the river powered waterwheels for paper mills; today it generates inexpensive, clean energy. The old mills are attractive industrial work spaces. A new coworking and makerspace, Brick Coworkshop, has been in one of the old mills since 2013. The owner says his operating costs are about a third of what they would be in a bigger city like Boston.

The Massachusetts Green High Performance Computing Center opened here in November 2012 and has drawn other tech-based businesses to the city. Spinoff development includes Gateway City Arts: We gave them a tax incentive—a first for a local creative business—and they recently purchased another building.

We just launched our Spark initiative with a $250,000 grant from the Boston Fed to support "entrepreneurship for all." Sometimes people with good ideas don't know how to access space or get business permits or financing, so Spark helps out. That fits with my idea that government should take an active role in the development of the future. Some people say it should take a back seat. But a lot of things that happen in this community wouldn't happen if our team didn't have the will to make them happen.

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7. Boulder, Colorado

Beautiful mountains, rushing rivers, a history of cutting-edge nuclear innovation since 1952—you may know some of the things that make Boulder great but not all of them. Like the nuclear thing: In 1952 the U.S. government planted its nuclear-weapons development program here, creating a demand for University of Colorado-Boulder physicists and engineers to fulfill Department of Defense and NASA contracts. It also led to Ball Aerospace, a 1956 startup cofounded by a CU-Boulder grad student. The small city (big town?) has been a haven for innovators in technology ever since: A 2013 study found that Boulder had six times the national average of high-tech startups. That number stands to grow, thanks to a partnership between CU-Boulder's new Silicon Flatirons entrepreneurship center and the Atlas Institute, a technology incubator. "Boulder's startups once operated parallel to the university," says Brad Bernthal, director of Silicon Flatirons' startup initiative. "But now CU 'gets it' in terms of innovation trends." It also gets it in terms of grants, having recently landed $4 million from the Blackstone Charitable Foundation. The mountains are still pretty spectacular too.

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8. Reno, Nevada

Startups need support. They need coffee and alcohol and sometimes even a special flag. Like in downtown Reno, where James Elste moved his year-old startup, Inqiri, in 2013. It's a popular neighborhood, with restaurants, a movie theater, and parks along the Truckee River, and as Elste got to know the area a little better, he found that there were dozens of other recent startups there, clustered around Reno Collective, a technology-focused shared office. But they didn't have a support system. Or even a name, which they remedied within a few months, calling the neighborhood Startup Row and creating banners to hang from light posts. All that was left to solve was the alcohol, so Elste and his partners introduced Whiskey Wednesdays at a local pub to keep the group connected.

Although technology startups like Elste's make up the majority of new businesses in Reno, the city also caters to makers, with an arena-size makerspace and artists' studio called the Generator. Between 75 and 300 fabricators, painters, sculptors, metalworkers, carpenters, and craftspeople head there each day—especially before Burning Man, when the giant studio is used to build installations for the festival.

Jamie Kingham/Getty Images

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9. Des Moines, Iowa

Last October AOL cofounder Steve Case rolled into Des Moines on his tour bus. The city was one of five one-day stops on his Rise of the Rest Road Trip, during which he looks for startups to invest in. That afternoon he hosted a Shark Tank–like competition at the Science Center of Iowa. After hearing nine pitches, Case invested $100,000 in Bawte, an app that organizes user manuals and warranties. Bawte beat out Igor, which creates software to manage energy use remotely. But just days after Case left town, Igor landed $2.5 million from private investors and a $300,000 loan from the Iowa Economic Development Authority.

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10. Cleveland, Ohio

Of all the things someone might have suggested Cleveland needs, a new magazine couldn't have been too high on the list. But in 2006 Anne Trubek came to Cleveland and later launched Belt, an online magazine and book publisher that covers the Rust Belt revival. She chose the city, in part, for the low cost of living and running a business. She's staying because she loves the place—and the spirit of its people. "We were down for years," Trubek says, "but energy is coming back to the city. Good things are happening, and we know we need to give those good things a push."

Along with the local biomedical and biotechnical industries (and Trubek's work at Belt), those pushes are also coming from Cleveland's own little-known maker scene. Six years ago Jason Radcliffe, a local designer and fabricator of metal furniture, organized the first F*SHO furniture show with four other makers. "In one day we drew 350 people," he says. Last year F*SHO exhibited work by 30 craftspeople, and more than 2,500 people attended. "Each year the show brings new buzz," Radcliffe says. "The show has brought success to a number of participants and inspired other people to become makers themselves." Cleveland's resurgence has begun, and for once its prospects have nothing to do with LeBron.

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11. Urbana, Illinois

Sometimes it takes only one institution to fire an entire town's imagination. In the case of Urbana, that institution is the University of Illinois at Urbana-Champaign (UIUC), which graduated the engineering and technological talent that started Netscape, PayPal, Tesla Motors, and YouTube. To this day UIUC incubates and accelerates startups, whether they're run by students or not. "Anyone can request a free consultation with our entrepreneurs-in-residence, or get help with writing grants for funding," says Laura Frerichs, director of UIUC's Research Park. And since the cost of living is only slightly higher than the cost of those free consultations, Urbana is as good a place to grow your business as it is to conceive of it.

University of Illinois at Urbana-Champaign

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12. Queens, New York

You know Brooklyn: flannel shirts, skinny jeans, nonprescription glasses. But what you may not know is that it casts an undeserved shadow over its neighbor: the next great center of innovation in New York City, the borough of Queens. First off, rents are cheaper in Queens than in Brooklyn. At QNS Collective, a coworking space that opened in the neighborhood of Astoria in 2013, you get a desk, locking storage, photocopying privileges, and a generous supply of paper clips, all for under $300 a month. Two miles away, in Long Island City, you'll find the recently renovated Falchi Building. The former warehouse for a Manhattan department store, the five-floor, 650,000-square-foot building houses new businesses such as Lyft (a competitor to Uber) and Coalition for Queens, a nonprofit that supports local technology startups. Plus, Manhattan's renowned Doughnut Plant recently relocated there on a 10-year lease, so at least you won't go hungry.

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13. Detroit, Michigan

A full-service photo stuido (Woodward Avenue Photography), a residential exterior- and interior-design firm (Brush Park Studio), an artist collective that rents space to painters and sculptors (Corktown Studios), a job placement and training center for homeless women (the Empowerment Plan), a bike advocacy group (Detroit Bike City). They're all alumni of the Detroit Creative Corridor Center's Creative Ventures Residency Program, which puts design- and creative-based businesses through a six-month schooling in scaling their companies, raising funds, and developing client bases with mentors. The artists of Detroit are lifting each other up, and lifting up the city in the process.

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14. Austin, Texas

The capital city's top 10 startup virtues, from a local believer. —Jaime Netzer

1. Like other startups, my company, the Zebra*, offers great perks. Free home maid service, open bar, bimonthly company outings (karaoke, floating the Guadalupe River), and bring-your-dog-to-work day every day.

2. Computer geeks galore. They flow out of UT-Austin and local coding schools and programming bootcamps like MakerSquare.

3. We don't have to buy plane tickets to get to SXSW Interactive. Incredible networking and party opportunities every year—free.

4. Incubators and shared work spaces. Capital Factory has about 700 members. Pay $200 a month and you've got yourself an office. The national accelerator Techstars opened here in 2013. It's helped start more than 400 businesses nationwide.

5. It's about the people, right? The Zebra is in a building called Chicon Collective with other bootstrappers, the warriors of the startup world. I am proud to be one.

6. Not into bootstrapping? Investors like Silverton Partners and Austin Ventures are here to help.

7. Weather so nice you wonder why you ever owned a coat.

8. A startup scene that does good. The Austin Startup Games is all about this—friendly Texans making the world a better place.

9. Google Fiber. Faster Internet is very good for startups.

10. Tacos. Breakfast tacos, BBQ tacos, all the tacos. Cheap, cheerful food is also good for startups

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